Louis Proyect and the Pro-Poverty Girl

In one of the small incongruities of our age Louis Proyect used to work for Goldman-Sachs, though unsurprisingly only for a short time. Nevertheless, he's on CEO Lloyd Blankfein's mailing list, receiving the annual missive to shareholders. To which Mr. Proyect responds with an open letter.

Goldman-Sachs is in the financial services industry. A brief account of what they do is presented on their webpage here. It is highly specialized. Just as the science literature is mostly opaque to people outside of the discipline, much of what Goldman-Sachs does is unintelligible to the layman. As Adam Smith pointed out over two centuries ago, specialization is a good thing. It creates more different kinds of jobs and more opportunities for trade. Indeed, specialization is the mark of rich societies--people working in large, deep, complex markets will be wealthier than those living in simple, subsistence-level economies.

Still, opacity leads to paranoia, and especially on the Left (but also on the Right), Goldman-Sachs has come to represent surreptitious villainy and corruption. That the firm's alumni populate the Trump administration is apparently proof-positive the fix is in. Without in any way excusing actual corruption  (which undoubtedly exists), I simply don't believe it is the major problem with our government, and I think these fears are way over-wrought.

Mr. Proyect objects that Goldman alumni Gary Cohn and Steve Bannon now hold high positions in the Trump administration. He just assumes that these gentlemen's ambition is solely to make the world right for Goldman-Sachs. In particular, he condemns them for supporting the repeal of Dodd-Frank.

I don't understand Dodd-Frank--it's a very complicated bill regulating an industry that is to me opaque. I don't think Mr. Proyect understands it either. But I have it on authority from people I trust that it is a highly intrusive, expensive, and vague set of rules that if completely followed would destroy most financial institutions. It is not followed, and is substantially unfollowable. It's purpose is to prevent a repeat of the financial crisis in 2008. Unfortunately, the world's next financial crisis will not remotely resemble 2008, and hence won't be prevented at all. So the primary effect of Dodd-Frank is simply to inhibit business and make people poorer.

Either way, men from Goldman-Sachs know more about Dodd-Frank than either me or Mr. Proyect. And they are no more in favor of a financial crisis than anybody else. So I'm generally inclined to defer to their judgment. Plus I distrust regulations--they hardly ever work as intended.

Then comes the quote that Mr. Proyect reports as being the takeaway:

(Mr. Proyect quoting Mr. Blankfein) Putting aside one’s individual politics, the outcome of the U.S. election raises the possibility of more stimulative tax and regulatory policies, as well as plans for more infrastructure spending. This represents a substantial change in direction for the U.S., and offers many investors and companies a reason for optimism.

So what is it that makes Mr. Blankfein optimistic? Obviously more money for Goldman-Sachs, but not only that. It also means more investment (in capital goods and equipment), more employees, more consumer products, and even more infrastructure. Why is this bad? Mr. Proyect give us a really silly reason:

A reason for optimism? My god, are you are out of your mind, Mr. Blankfein? Scientists have concluded that climate change is threatening a sixth extinction. You really need to read Naomi Klein or even watch Al Gore’s documentary. By seeing everything through the cash nexus, you are losing the thread.

We all know that Mr. Proyect loses sleep because of the apocalypse du jour. Yesterday's hypothetical disasters have conveniently been forgotten: an asteroid hitting the earth, a new ice-age, peak oil, nuclear war, a global pandemic, or perhaps a population explosion. Scientists, who have and will warn us about lots and lots of things that have never happened, are no better at predicting the future than common undergraduates. Mr. Blankfein--long familiar with failed financial forecasts--rightly dismisses such Luddite fever dreams.

(Mr. Proyect could have cited a truer criticism. If all the good things Mr. Blankfein lists are bought from borrowed money, then it probably is bad. For however much it helps us now, we'll have to pay it back in the future.)

But Mr. Proyect is not alone in his criticism. He has a powerful new ally: a little girl. Or at least the statue of a little girl who stands athwart the ambitions of Wall Street's bull in Lower Manhattan.
             

There she stands--in tailored dress and bespoke shoes--steadfast against wealth and prosperity. Odd, because she's as much a beneficiary as Mr. Proyect.

Perhaps these are her shoes, available from Zappos for $60.

Or maybe she's a more petty bourgeois consumer--akin to Mr. Proyect--and shops at Saks Fifth Avenue, where these can be had for around $400.

I couldn't find her dress on-line (maybe I just don't know where to look), but it's obviously store-bought and fits perfectly. If it cost more than $100 I'd be astonished.

Little Miss Statue lives very well at low prices because of the miracle of modern capitalism. Facilitated in part by the people at Goldman-Sachs.

She is no more inclined to live off the land on an eco-friendly subsistence farm than Mr. Proyect is. The odd thing about her statue is that she doesn't have a cell phone. How many well-dressed little girls in Lower Manhattan do you see who don't own a cell phone? Even Mr. Proyect owns a cell phone! Personally I think she's just trying to fake poverty.

So here she is--she and Mr. Proyect--standing firm for poverty for everybody else besides themselves. Not on purpose, but just because they don't understand that a modern economy needs capital to be efficiently allocated. And such allocation is non-trivial--it requires many very specialized employees doing complicated jobs. What the little girl doesn't comprehend is that her shoes and her dress and her cell phone, along with the electricity at her house and the subway that brought her to Wall Street, all depend on finance (among many other things).

On second thought, maybe I give her too much credit. Maybe she knows all to well that her efforts will make the world poorer. Perhaps she's envious, or evil, or selfish, or stupid. I don't know. Whatever the case, there she is, standing fearlessly in front of the bull demanding her welfare check.

The bull knows what's going on. He's raging for a reason. He doesn't see a little girl. What he sees is the poverty devil in disguise.

Down With Poverty!

Further Reading:

• Book Review: Rise & Fall of American Growth
• If You Really Care About the Poor
• Mr. Proyect's Pro-Poverty Alliance

The 48th SWP Convention

There's nothing like a March blizzard (more than a foot of snow on my doorstep) to make time to complete an unfinished post. I owe my former comrades in the Socialist Workers Party (SWP) some comments on their 48th National Convention, held January 14-16 in New York. The report, by Naomi Craine and John Studer (C&S), lacks some vital statistics, like attendance, etc., but has political substance.

The bottom line is this:

Convention delegates adopted the three reports and summaries, the introduction to the Clintons’ Anti-Working-Class Record, Jack Barnes’ letter to Raúl Castro, and other motions on the party’s political course. They elected a National Committee to lead the implementation of convention decisions.

The Introduction to the Clinton book was written by Steve Clark, and can be found here. The Letter to Raúl is reprinted here. The names of the fifteen National Committee members (along with eight alternates) are posted alongside C&S's article.

I'll reduce the whole thing to bullet points, expressed in my own words.

• The world is going to hell in a handbasket.
• Fidel is a saint.
• The sole alternative to the Democrat and Republican parties is the SWP.

Is the world really going to hell? It can certainly seem that way. The Introduction describes refugee flows, wars, and new diseases. C&S agree with Trump that the country has descended into "carnage," evidenced by "a decline in the size of the working class as jobs disappear, falling real wages, cop brutality, attacks on women’s right to choose abortion, multiple deployments for workers in uniform sent to fight and die in Washington’s wars in Afghanistan, Iraq, and more." The SWP attributes all of this to a "crisis" in capitalism.

They're wrong, and so is Donald Trump. Most of the increased "carnage" is just an illusion, brought on by the rise of social media. That turns everybody into a reporter, meaning that events that never used to catch the public eye now become headlines. Newsfeed from Twitter. Martin Gurri, in his sweet little book The Revolt of the Public, describes this phenomenon very well.

Technology has improved in other ways as well. Disease has always been with us, but today we can identify it in very specific terms, e.g., the scary Zika virus. The proliferation of labels makes it look like disease has gotten worse, which it definitely hasn't. So this, too, is an illusion. Likewise, while wars are more destructive than they used to be, they're hardly more common.

Coincidentally, I am just starting to read Tyler Cowen's latest book, The Complacent Class (I'll likely review it here when I'm finished). His argument is that, far from there being more turmoil, there is in fact much less. Americans are moving less, switching jobs less, going out less, etc. Mr. Cowen promises actual data to back up his case, which whether you agree with him or not, makes for a better argument than the Party's method of piling on cherry-picked anecdotes.

The Party describes all of this as a crisis of capitalism, due to the fact that the ruling class requires ever increasing profits. Accordingly, the rulers are all trying to reduce our standard of living so they can have more for themselves.

This makes no sense. No capitalist can earn a profit unless somebody buys their products. The goal of capitalism, therefore, is to increase consumption, i.e., to make everybody richer. If capitalism has a problem it's not that we're too rich, but rather that we're too poor. The ruling class has absolutely no desire whatsoever to lower our standard of living--quite the contrary. They've lent us money to beat the band, and then convinced us (as if we needed convincing) to lend ourselves even more and more money. The result is that current entitlements are unsustainable, and the world has an incipient debt crisis on its hands.

That may be a crisis, but it's definitely not the one the Party describes. The imminent impoverishment of the world's working class is not in the cards.

Is Fidel a saint? Of course not. Mr. Barnes, in his letter, simply argues by assertion. Any criticism of Fidel is a "slander." What's left are only compliments. So of course he appears rather saintly.

The letter elevates Lenin and Fidel as the two most important figures in 20th Century history. Without them, the only two successful Communist revolutions would never have occurred. Much of this is semantics--it depends on how you define "success", "communism", and "revolution." Deviate from Mr. Barnes' orthodoxy in any way and you'll come to a different conclusion.

For me, it stretches credulity to label either the 1917 or the 1961 revolutions as "successful." The former led directly to Stalin, purges, famine, exile, poverty, and mass murder. Fidel's 1961 version was not quite so disastrous, but has destroyed Cuba's economy, her links with the outside world, and decimated her population. The brightest and most ambitious Cubans now live in Miami, where they are doing very well. They will never go back to Cuba in large numbers. In that sense the Cuban revolution was successful for the United States--we got highly-skilled immigrants.

Both revolutions have left their respective countries far worse off than they were before. That's not a success. Mr. Barnes closes his letter with a quote from Fidel: "There will be a victorious revolution in the United States before a victorious counterrevolution in Cuba." Fat chance.

The SWP, like all the other vanguard grouplets, believes that it and it alone can successfully lead a revolution in the US. Taken seriously (which is hard to do), this means that the future of our country is in the hands of the 15 people elected to the National Committee. These include, among others, Jacob Perasso, whose claim to fame is that his apartment was once burglarized. I've never quite understood how this list is put together--I think Jack Barnes just makes it up. I don't know why Brian Williams isn't on it--he's clearly one of their best people.

And then there's the list of eight alternates, ranked by number, like in a jury. Does the Party really expect that eight of their National Committee members will expire in the next two years? Of course not. This is just a way of passing around extra bennies. Brian Williams isn't on that list, either. Got me hanging.

The Party has about 100 members. If past procedure is still followed, the convention is delegated--one delegate for every five comrades or major fraction thereof--for which alternates are also chosen. So perhaps 40 comrades had some official obligation at the convention. Those delegates elect the National Committee, albeit from a slate proposed by the Political Committee, which itself is a subset of the National Committee.

That's an awful lot of bureaucracy for 100 comrades! The whole thing is silly, and ultimately undemocratic because the entrenched leadership can put its thumb on the scale every step of the way. Not that that matters, because unlike in Cuba or the Soviet Union comrades can quit the organization without being shot.

Further Reading:

• Book Review: Is Socialist Revolution in the US Possible?
• If You Really Care About the Poor
• Book Review: Are They Rich Because They're Smart?

Lynn Henderson on Donald Trump

My former comrade, Lynn Henderson, posts a long article at Socialist Action entitled A watershed election for U.S. imperialism. Despite being a well-written, worthwhile read, the piece is a mess.

He posits at least two conspiracy theories. First, he assumes that U.S. Imperialism is actually a thing. It literally sits around and makes conscious decisions about how best to screw the working class. While Mr. Henderson doesn't identify "imperialism" with Jews, it's precisely the same sort of conspiracy supposedly documented in The Protocols of the Elders of Zion. Perhaps the "imperialists" meet in secret organizations such as the Trilateral Commission? Or is it the Bilderberg Group? Or maybe they cavort around naked in the woods at Bohemian Grove in Northern California while plotting their nefarious schemes?

Mr. Henderson never tells us how this conspiracy supposedly transpires, but apparently everybody from George Soros to the Koch brothers to Larry Page to Charlie Hamm are all on the same page about what to do next. Note to Mr. Henderson: these people don't even talk to each other much less agree on how the world should run.

The second conspiracy theory concerns Obama's strategy in Syria. Here Mr. Henderson must have access to information that nobody else possesses. Was he a fly on the wall in the White House situation room? He claims to have the chronology of events in Syria absolutely down flat, without the shadow of any doubt. Here's how it supposedly all transpired:

• Obama really wanted to go to war in Syria.
• He used chemical weapons as an excuse, making his infamous "red line" remark.
• But the British--unreliable bastards that they are--refused to go along with Obama's war. (Apparently British imperialism is not on the same wavelength as US imperialism. Mr. Henderson doesn't explain why.)
• Because the Brits didn't like it, Congress might not have approved war authorization.
• Therefore John Kerry made an agreement with the Russians.

I find this incredible. Unsurprisingly Mr. Henderson offers no evidence for his theory at all. A much simpler (and widely accepted) explanation is that Mr. Obama (who never had any intention of getting involved in Syria) was trying to push Assad into making a settlement and the latter called his bluff. The result was another couple hundred thousand dead people.

Mr. Henderson relates a very strange story about the growth of the American middle class. In his telling it's all because of World War II. Apparently the massive destruction of Europe and East Asia enabled US imperialism to conquer the world (at least temporarily) and extract enough wealth to enrich US workers as well.

People earn money by trading goods and services with each other, and capitalism maximizes those trading opportunities. It's really hard to trade with people whose houses and factories have all been destroyed. The US lent Europe money to rebuild it's infrastructure, which fortunately happened successfully. For otherwise American taxpayers would have been on the hook and lost their investment. We'd all have been much poorer.

The real reasons for the development of the American middle class (along with similar populations in Europe, Japan, Korea, and elsewhere) is because of new technology. It's described in great detail in Robert Gordon's book The Rise & Fall of American Growth (which I reviewed here). Here's the list: the electric light bulb, the internal combustion engine, antiseptics, canned food, indoor plumbing, clean running water, air conditioning, airplanes, the department store, interstate highways, modern finance, and more. Mr. Henderson mentions none of this--he nonsensically attributes our modern living standard to WWII.

Finally we get to Mr. Trump, who presumably is the topic of the article. At least Mr. Henderson is smart enough not to call Mr. Trump a fascist, which he manifestly is not. But otherwise he throws the book at him:

... the Republican Party is captured by an extreme right wing, rogue billionaire, an open racist, who brags about his successful sexual assaults on women, banning individuals from entering the country on the basis of their religious affiliation, and among other things, promises to launch a global-wide trade war. The ruling class itself sees Trump as a loose cannon, dangerous and unstable—the kind of president that in this threatening new era for U.S. capitalism, demonstrates every potential for making things dramatically worse.

Much on this list is either false or a gross exaggeration. Trump is definitely not "extreme right wing." Most of the Republican establishment (which includes a significant Libertarian constituency) disowned him. They're in favor of free trade and (relatively) open borders--see Marco Rubio as a clear example. Also Paul Ryan, Mitch McConnell, Jeb Bush, etc. Trump's positions on trade, industrial policy, and even unions, are much closer to the Democrats, which is why he won over blue-collar voters who voted for Obama in 2012. Even on health care he's a Democrat--whatever else Trump-care does, it's not gonna water down Obamacare. Trump agrees with Bernie Sanders on foreign policy, condemning our recent wars with almost as much vitriol as Socialist Action.

Second, he certainly isn't an "open racist." He's been actively courting the Black community since before the election, including most recently touting historically Black colleges. Scott Alexander (a superb post!) describes Trump as not being any more racist than the average 70-year-old white guy. Two acts of "racism" are held against him: his birther campaign against Obama, and that he proclaimed "I love Latinos" while eating a taco bowl in Trump Tower. The former was stupid, not racist. And the latter may not have been politically correct, but hardly qualifies him as a racist. An "open racist" would have said "I hate Latinos." Trump has never said that nor anything remotely similar.

Trump undoubtedly acknowledges the continued existence of racism. But he also maintains (correctly in my view) is that racism is not the central problem in our society. The problem with the police is not that they're racist (though some are), but mostly that they're not preventing crime in Black communities. Thus his promise to crack down on crime is as much a bid for African-American support as it is anything else. Likewise with his championing of school choice.

Trump got more Black votes than either McCain or Romney. And his vote among Hispanics equaled that which Republicans typically get. There is no evidence that he is viewed in those communities as unusually, or "openly" racist.

Third, Trump bragged about assaulting women in a media clip from a decade ago. Mr. Henderson should use the past tense--"bragged." Trump is certainly not bragging about sexual assault today. This sloppy use of language discredits Mr. Henderson's argument.

Trump does not threaten a global-wide trade war. And the US, like any other country, has a right to control who crosses our borders. Mr. Trump has long since backed off barring all Muslims, but he is certainly right that terrorism tends to come from Muslim countries. Again, exaggeration is not Mr. Henderson's friend.

I think accusations that Trump is an unstable, undisciplined loose cannon, while perhaps arguable, are mostly incorrect. His campaign turns out to have been spectacularly well organized. Which is fairly obvious since he won the election while spending only a fraction of the money Hillary wasted. While he certainly has made mistakes, accusing him of stupidity, mental illness, or lack of self-discipline I think are charges very far of the mark.

Further Reading:

• Old White Man Runs for President
• Trump & Trotsky
• Good Trump, Bad Trump

Faction Fight!

Socialist Action (SA) has published a very long document entitled Opposition Formed in the Fourth International. At about 6700 words, it's one of those things I've read so that you don't have to. Authored by a committee, it reads like something out of a Dilbert cartoon. Though much less sensible.

The script is familiar:

• The leadership of the International is diluting the principles of Trotskyism by crossing the class line.
• This is a betrayal of the working class.
• A Left Opposition within the International recognizes the danger and calls it to attention.
• They attempt to rescue the International. "[W]e will initiate a debate with every FI [Fourth International - ed] comrade and section willing to communicate with us. We intend that this debate be respectful of differences, and for the unfolding process to help reinforce our international in a context of global capitalist crisis."
• Eventually this will lead to a split, resulting in the creation of yet another iteration of the "Fourth" International. Perhaps this will be variant 4.7.21a.

The primary issue is also a reprise from the past. The lede paragraph:

The FI leadership replaced the strategic goal of building revolutionary parties with the building of “broad parties.” A century after the Russian Revolution, some ask: Is the principle “no revolution without a revolutionary party” outdated? We do not believe it is. Over the last few congresses, the FI leadership has been explicitly aiming at building “broad” parties, without clear programmatic and strategic boundaries. What are the results of this policy?

Broad parties sounds to me like a rough synonym for popular front. In the latter, so-called revolutionaries make temporary alliances with capitalist parties to achieve common goals. This has long been a tactic of the "Stalinist" parties. For example, the CPUSA has supported Bernie Sanders and Hillary Clinton in the most recent election. Trotskyism was founded in part on opposition to popular fronts, preferring instead united fronts which restrict participation only to working class groups.

So the FI leadership is accused of watering down Trotskyism for the cause of expanding the movement beyond a narrow group of sectarians. As a result they supported SYRIZA in Greece, and opposed the nominal Greek section of the FI. I assume that was OKDE-Spartacos, which SA previously highlighted here (and which I lampooned here).

The document claims that the FI strategy was a failure.

In recent times, we’ve seen major failures. In the Spanish state, Anticapitalistas is preparing to form a joint majority with Pablo Iglesias, thus adapting to a bureaucratic leadership that explicitly seeks to govern in the framework of capitalist institutions. By trying to gain electoral or mainstream media influence, we are led to sacrifice our goal — the overthrow of the capitalist system. 

The Syriza experiment was embraced to such an extent that the Greek FI section, which refused to support it, was even accused in the IC of being counterrevolutionary.

SYRIZA is still the governing party in Greece. Antarsya, the united front of which OKDE is a member, got 0.85% of the vote in the 2015 election. Please let me know which strategy was a failure.

Of course accusing the FI leadership of failure is a little rich coming from the likes of Jeff Mackler. Here's a guy--the very personification of pathetic--whose major accomplishment in 2016 was a 5-day campaign swing through southern New England. Clearly SA sets the bar for success very low.

The document attempts a theoretical justification for the strategy of ever more sectarianism. There are two major crises that supposedly confront the capitalist class.

1) "The fundamental problem for capitalists still is the tendency of the rate of profit to fall."

This is a completely meaningless sentence. Does rate mean as a fraction of capital invested? This can't fall almost by definition, since the value of capital fluctuates with return. By this measure the real rate of profit remains nearly constant over centuries (see, e.g., Piketty).

Or does rate mean as a fraction of operating costs? If there's a long term trend here nobody outside of SA is aware of it. They need to produce some data to back up their case.

This "crisis" is just nonsense on stilts.

2) "Fossil and mineral resources are not infinite. The maximum peak of extraction will soon be reached. Capitalism with its structural logic aims always to increase consumption — to utilize more raw materials and energy."

Of course they're right that the world is not infinite. But natural resources will outlast human civilization--we are in no danger of running out for many centuries. No crisis here.

More importantly SA reveals its true colors: they are both Luddite and pro-poverty. Yes, capitalism wants to increase consumption. Indeed, capitalism has successfully pulled two billion people out of poverty--several hundred million in China just within the last 40 years. Yet SA is against that. They valorize living standards in places like Cuba and North Korea. Or Greece if it had followed OKDE's advice and left the Eurozone.

How can you eliminate poverty if you're against consumption?

It's when it proposes alternatives to the FI strategy that the document dissolves into complete incoherence. They revert to the principle: "no revolution without a revolutionary party." Of course the only revolution led by even a semblance of a Bolshevik party was the Bolshevik revolution itself. Nothing since then has duplicated that model: not China, not Cuba, not even North Korea. So on a single data point they generalize for all time by willfully ignoring any counter-examples.

They quote from Lenin's 'Left-Wing' Communism, An Infantile Disorder. This book was written in 1920, after the 1917 revolution, and it was intended as a political polemic rather than an accurate history. Indeed, it significantly exaggerates the role of the "revolutionary party" in the actual revolution. Its appeal for party discipline lays the groundwork for Stalin's later purges (whether Lenin actually intended that or not).

There's much more in this document I could make fun of. For example, they claim to support the Kurds, but are against them receiving any weapons from any "imperialist" country, i.e., anybody except Cuba or North Korea. So how's that supposed to work? Kurdish resistance to reactionary groups like ISIS is to be maintained solely on the strength of solidarity from Jeff Mackler and his gang of kooky clowns?

I'll leave it at that.

Further Reading:

• Old White Man Runs For President
• Jeff Mackler's Greek Post-Mortem
• Book Review: Lih's Biography of Lenin